I’ve spent the last five years working on two projects with investment and pension fund managers implementing Enterprise Data Management (EDM) solutions using what was once Cadis and is now Markit EDM. Before that, I spent fifteen years implementing portfolio management systems that were invariably paired with the Eagle PACE data warehouse. Before that, we built stuff using Oracle and Sybase. Before that, you don’t want to know.
For all of these projects, we employed a large team of highly skilled (and not inexpensive) experts, building EDM and Data Warehouse processing from the ground up. We spent months and years developing the data model, technical and business validation rules, data transformation, matching, mastering, exception processing, etc. Sometimes we had to abandon the project, invariably not completing everything in the original plan. With gold(ish) copy data in place, we would build some sort of reporting function. This prompted more design, development, testing, and support.
Go to any industry conference and speak to the major investment, insurance, and pension fund managers and you will hear the same story. Every company has teams of people building and implementing Enterprise Data Management systems, and other teams building the associated reporting platforms.
We can’t read an article without the word “disruptor” closely followed by “blockchain.” It’s laughable. What has actually been delivered that is really disrupting our industry? I believe that the investment and pension fund management industries will truly be disrupted when we find a player that can provide an outsourced/“off-the-shelf”/pre-packaged Enterprise Data Management system. Ideally, this would be linked to a packaged Enterprise Data Store (EDS) that uses the data supplied by the EDM.
We need a new player that will provide an “EDM App.” We will choose from a menu that lists the instrument types that need to be supported. We will provide information defining our data sources and our target data deliverables. We will define our preferred hierarchies for security master, pricing etc. We will identify the risk and analytics data that we want to receive. The EDM App will take our data, apply any required mastering and transformation, and deliver us cleansed, governed data. It will provide a full data dictionary with details of lineage, tracking all data elements from source to target.
In parallel, a new “EDS App” will take the mastered, cleansed data from the EDM App and provide a client-customizable Enterprise Data Store. We will define the data domains on which we want to report, based on the Data Dictionary from the EDM App. The EDS App will provide that data – over the Cloud – and we will use business intelligence (BI) and other reporting tools to slice and dice the data, based on our unique visualization and reporting needs. Data-mine to your heart’s content.
It’s perfectly feasible. But who are the players that will deliver this? Our current service providers are an option. One of them has something very close to the architecture that will support the EDM App described above. My belief is that this is where fintech will really prove itself.
Just last week one of my client colleagues told me how he had just returned from a conference where, as described above, every one of the attendees was working on a major EDM initiative. He suggested that if they each contributed perhaps 10% of their budget for these activities to a jointly managed startup that would develop a system that could be shared across the participants, everyone would save huge amounts of money, and get a product that could be maintained and enhanced to support them on an ongoing basis. For a fraction of the cost – and risk – of doing it themselves.
My bet is that in five years what I describe above will be industry standard, just like the other cloud services we are now seeing. We will, very soon, see a startup that develops the EDM App. Closely followed by one that develops the EDS app. They will put an end to the millions of dollars that are being spent by IT departments to develop what is essentially the same application.
Talk about blockchain will likely continue; but if we really want to disrupt the asset management industry, it’s time to build an EDM App.